California Employment Law Updates: 2027

What employers should know about key developments this week:

Limits on Automated Decisions and Surveillance: Starting July 1, 2027, under California’s “No Robo Bosses Act,” employers cannot base disciplinary or termination decisions solely on an automated decision-making system’s output, and they face new written notice and data access obligations. Separately, AB 1883, effective January 1, 2027, bars employers from using artificial intelligence in workplace surveillance tools to predict or infer an employee’s emotional state or to collect neural data.
Stay-or-Pay Law Delayed: Amendments to California’s stay-or-pay law provide some relief to employers: Clawback restrictions now apply only to contracts entered into on or after January 1, 2027, although plaintiffs may still challenge existing agreements under other legal theories. The changes also add exemptions for certain employees in the financial services industry, permit recovery of some paid time off advances, and allow more flexibility in the timing of qualifying bonus clawbacks.
Higher Pay Data Penalties: California’s penalty for an employer’s first failure to submit pay data remains capped at $100 per employee per pay period, but the penalty for subsequent violations will increase from $200 to $1,000 per employee.

California’s New Rules on “Robo Bosses,” Clawbacks, and Pay Data
Play
October 14, 2026

Transcript

[00:00:03] George Whipple: Welcome to Employment Law This Week. I’m George Whipple. California employers are facing a host of new legislation. This week we bring you some highlights. Starting July 1, 2027, employers in the Golden State will face new restrictions on their use of an automated decision-making system, or ADS. Among other limitations, disciplinary or termination decisions based solely on an ADS’s output will no longer be permitted.

[00:00:38] George Whipple: New obligations include written notice and data access rights. The "No Robo Bosses Act" is the first law of its kind, and could be a bellwether for other states. California added a slew of new AI legislation this year, including some that tries to predict where the technology will go. AB 1883 prohibits employers from using AI to predict or infer an employee’s emotional state or to collect neural data, or information generated by a human nervous system.

[00:01:14] George Whipple: The law still permits non-AI monitoring and explicitly allows surveillance tools for safety. You can read about all of California’s workplace AI changes at the link in the description. Perhaps the biggest employment story out of California this year is the significant new limitations placed on pay clawbacks.

[00:01:39] George Whipple: Now, new amendments to that law are providing some relief to employers. The effective date of the state's stay-or-pay legislation will now be pushed to January 1, 2027, instead of January 1, 2026. Pending claims from this calendar year are considered moot. The amendments also establish new exemptions for the financial services industry, permit the recovery of PTO advances in some cases, and allow more flexibility in the timing of bonus payments that qualify for a limited claw-back.

[00:02:19] George Whipple: You can find detailed information about the new amendments at the link in the description. California regulators want your pay data, and penalties for not sharing it are set to increase. While the fine for an employer's first failure to submit pay data remains capped at $100 per employee per pay period, the penalty for subsequent violations will increase from $200 per employee to $1000.

[00:02:50] George Whipple: California’s action here is an important reminder: While employers are no longer obligated to report pay data to the federal government, not all state and local governments will follow suit. In fact, some are doubling down. It's important to stay compliant with all regulations in your jurisdiction.

[00:03:12] George Whipple: That’s just a sampling of the new restrictions and requirements California employers are facing. We’ll bring you all the latest developments as these provisions are implemented. That’s it for this week. Thanks for watching. We’ll see you next time.

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